Thursday, September 12, 2013

New Book: The Debt Ceiling Disasters

-- Posted by Neil H. Buchanan

Earlier this week, Carolina Academic Press published my new book: The Debt Ceiling Disasters How the Republicans Created an Unnecessary Constitutional Crisis and How the Democrats Can Fight Back.  It is being published exclusively as an e-book, and it is currently available through Amazon in the Kindle format.  We anticipate that it will be available through Apple and GooglePlay soon.

The official publication date was Monday, September 9, which we chose because that was the date on which Congress returned from recess, supposedly to work on legislation to keep the government running past the end of the fiscal year on September 30, and also supposedly to deal with the debt ceiling.  Remember that the government officially hit the debt ceiling on May 19, the moment when the debt ceiling was revived after its Republican-inspired hibernation, which means that we have been operating under "extraordinary measures" for months.

Here are the short and long promotional blurbs from Carolina Academic Press:

Short version:
Since 2011, the United States has faced repeated threats of a federal default, as the radical new Republican majority in the House of Representatives has tried to prevent the President from borrowing enough money to pay for the spending that Congress itself has approved. In this book, Neil H. Buchanan explains why the debt ceiling law is unconstitutional (for two independent reasons), and how the President can and cannot respond, if Republicans refuse to govern responsibly and raise the ceiling when necessary. Professor Buchanan’s accessible and lively analysis debunks the myths about the debt ceiling that Democrats and Republicans alike have come to believe, showing that, for both legal and economic reasons, the debt ceiling cannot be used to extort political concessions from a President.
Longer version:
In 2011, the new Republican majority in the House of Representatives embarked on a radical and dangerous path, threatening to refuse to increase the limit on federal debt.  This new Republican strategy threatened to bring about the first federal default in the history of the United States – a default that would be caused not by economic necessity, but by political opportunism.

Because no one had ever threatened to force the federal government to default on its obligations, politicians and scholars found themselves in uncharted territory.  Most commentary was superficial and ad hoc, failing to take seriously the profound legal and economic questions that the Republican strategy raised.  Neil H. Buchanan, an economist and a tax law scholar, emerged as the only expert analyst who systematically engaged in depth with all of the issues surrounding the debt ceiling.

This book brings together Professor Buchanan’s accessible and lively analysis of the debt ceiling disasters as they have unfolded since 2011.  He also provides an overview of where we now stand.  He explains why the debt ceiling forces the President to choose between nothing but illegal and unconstitutional options.  He shows that the President must obey the spending and taxing laws rather than the debt ceiling law, that novel strategies such minting platinum coins are both illegal and dangerous, and that the only way to stop the debt ceiling disasters from continuing into the future is for the President to take a constitutional stand today.
The book collects all of my non-law review writing for the past two years regarding the debt ceiling, including all of the discussions about the various constitutional matters, the supposed work-arounds (the Big Coin gambit, and so on), and the various political crises that have erupted since the House was taken over by the current crop of Republican radicals.  It all adds up to 44 chapters (organized into chronological sections, keyed to the successive political crises that prompted each new outpouring of analysis).  There are also new first and last chapters, which I wrote a few weeks ago as the book went to press, and as the next debt ceiling crisis loomed.

What made the book interesting and worth publishing, from my standpoint (and, I hope, for readers as well) is that it puts all of my writing in one place, in the order in which I wrote it.  Beyond the convenience factor, this also allowed me to see how the issues have evolved over time.  The starting salvos were focused on the Fourteenth Amendment, but after only a few weeks, the discussion had progressed to the separation of powers issue underlying "the trilemma."  (Professor Dorf's label for the underlying problem is still perfect.)  Sorting out the constitutional issues was followed by successive waves of analyses of various solutions.  Discussions then proceeded as the country lurched toward the misnamed "fiscal cliff," sequestration, and so on.

I must say that I was pleasantly surprised by how accurate my various predictions have turned out to be.  As one of my former research assistants put it, when she was going back to see which of my writings should be included in the book: "I don't want to exclude anything, because you've been right about so much.  At some points, looking back on it now, you seemed damned prophetic."  (OK, I know what you're thinking, and you can consider the source and take it with a grain of salt.  I will only mention that she had already landed a full time job when she said this.)

My other reaction to putting together the book was surprise in seeing how much I had written, and how the various pieces have covered virtually every aspect of the budget debates of what we might call "the debt ceiling era."  I have commented at various times (for example, in the previously unpublished first chapter of the book) that the strange thing about the scholarly debate regarding the debt ceiling is that it has been entirely one-sided.  Mike and I wrote our three articles for Columbia Law Review, and our detractors made off-the-cuff comments to reporters.

Similarly, in popular writing, I appear to be the only analyst who regularly and exhaustively engaged with all of the issues.  That is not as self-promoting as it might sound, because I am not saying that I did anything better than anyone else.  There just is not another body of work out there on this issue, other than what is published in this book.  Call it perseverance, or obsessiveness, or whatever you like.  Other than Professor Dorf, who (in addition to our scholarly co-authorship) weighed in from time to time on various aspects of the debate, no other commentator has covered the soup-to-nuts range of issues of the debt ceiling debate.  Readers will decide whether I did that well or poorly.  I must say that it has been fascinating.

12 comments:

Paul Scott said...

I am sure I have read most of it (and I pretty strongly disagree with your position on the best solution), but two new chapters! Plus it should be a great refresher for the new round of fun about to start in our capital.

Will be a good read I am sure.

The Dismal Political Economist said...

Congratulations to Professor Buchanan on his book. One hopes it will be widely read and highly influential. There are, however, two areas with which I and I think others would disagree with Mr. Buchanan.

The first disagreement is the premise in the title. While this issue was instigated by the Republicans, great blame, maybe more than 50% of the blame lies with the President. Mr. Obama did negotiate on the debt ceiling and this left Republicans with the all too reasonable belief that this President could be rolled, that he would negotiate with “fiscal” terrorists

The second disagreement is over the incomplete analysis of the trilemma, and the fact that the recommended option of Mr. Buchanan and Mr. Dorf for the President in facing the trilemma then produces a dilemma which makes their recommended option less desirable. What Mr. Buchanan and Mr. Dorf have presented that confronts Mr. Obama if Republicans refuse to raise the debt ceiling is that he has three options.

1. Cut spending

2. Raise Taxes

3. Ignore the debt ceiling and issue debt to meet the fiscal needs of the government

The trilemma is that each of these options is Unconstitutional on its face. Mr. Buchanan and Mr. Dorf argue that Mr. Obama should select option 3 as it is the option which does the least Constitutional damage and least offends the Constitution. Their arguments are convincing and compelling and should be accepted (Mr. Posner). But their arguments spring totally from their background as legal scholars. The battle is not being fought in a court of law, but in the court of public opinion.

So selecting option 3 creates a new dilemma which is this.

1. Violating the debt ceiling is the appropriate legal response, but is potentially and likely politically disastrous for the President.

2. Reducing spending is Unconstitutional and requires the President to violate his oath of office, but politically it is the best option for the President.

Part of the problem here is that the public react along political grounds (after all this is a political battle not a legal or fiscal one) and should the President announce that he is ignoring and violating the debt ceiling law he will likely lose the political fight, big time. Mr. Obama has little political capital left to spend. If Mr. Obama cuts spending he should be largely immune from the wrath of Republicans, after all the whole purpose of this exercise in confrontation by them is to cut spending. And he has a chance to gain the upper hand politically as vital government programs shut down for lack of funding.

But what would Mr. Dorf and Mr. Buchanan think about a third way. Specifically could Mr. Obama go to the Supreme Court and ask for a preliminary injunction or temporary restraining order against enforcing the debt ceiling limit while the administration petitions the Court for a ruling on the Constitutionality of the debt ceiling and which Unconstitutional action in the trilemma Mr. Obama should take?

If the Court declined to issue such an order Mr. Obama could cut spending and hopefully gain the upper hand politically. It would also make cutting spending the least Unconstitutional option, as the option proposed by Mr. Buchanan and Mr. Dorf would now have been ruled out. If the Court accepted the case and provided the temporary relief it would give time for the issue to coalesce politically and reach a possible denouement, or the Court could rule on the Constitutional issues and settle the issue once and for all.

Is this a viable strategy and a way out? Is this better than an overt violation of the debt ceiling?

Michael C. Dorf said...

TDPE poses a useful question. The President cannot simply ask the Supreme Court to issue an advisory opinion, but he can act in such a way that ensures test case: Cutting mandated spending would permit the beneficiaries of that spending to sue the Treasury, at which point the President could defend on the ground that he has no valid options but would be happy to follow whatever course the Court orders him to take or to choose among options that the Court deems permissible (or least impermissible). It's not clear that borrowing beyond the debt ceiling would give anyone standing to complain in court, which we have regarded as a virtue of unauthorized borrowing, but in this scenario it's a vice. Unilateral presidential taxes would give rise to an Article III injury, but the tax might not come due right away, and under the Tax Anti-Injunction Act, a disgruntled taxpayer would have to wait for the tax to come due, pay it, and then sue for a refund in the tax court, rather than marching right into federal court. So the quickest way to tee up a test case is through unauthorized spending cuts. But even that might not be fast enough. Litigation that proceeds at lightning speed--going through the trial court to the Supreme Court in a week, say--might be too slow to avoid grave financial damage to the U.S. and the global economy. So--like all of the other options, including the one we favor--a strategy designed to get guidance from the Supreme Court carries very large risks.

As for the observation that our analysis is legal rather than political, I suppose that's right. But that may be partly because the Administration has generally accepted the Republicans' framing of the issues in public debate. At least some congressional Democrats tried in prior periods to expand the range of options, albeit by making less than ideal arguments.

The Dismal Political Economist said...

Mr. Dorf has informative points, but even if legally borrowing above the debt limit cannot be challenged in court because no party has standing, this reliance on what the public would call “legal mumble jumble” would still seem to be highly damaging politically to the President. The public hates that kind of stuff.

I understand the President cannot obtain an advisory opinion from the Supreme Court, and because of limitation on the size of the posts this site allows I did not explain my proposal adequately. I would envision that an administration official, probably the Secretary of the Treasury when faced with the trilemma would go into Federal Court and ask the judge for a temporary order allowing him to issue debt above the debt ceiling, citing irreparable harm (if the U. S. defaulted on its debt) and violation of Constitutional duties (not spending money Congress authorized and appropriated) if he were not allowed to issue debt prior to a definitive ruling on the validity of the debt ceiling law.

It seems highly likely that a court would grant such a request, setting in motion the ultimate resolution at the Supreme Court. If it did not provide temporary relief it seems likely the court would at a minimum grant short term relief for an appeal of the request for temporary relief. Either way the case would ultimately move to the Supreme Court, and the administration would have not only the legal high ground that Mr. Buchanan and Mr. Dorf believe they have, but also the political high ground that is equally or more important. In the interaction between politics, policy and the law it is important whether or not a party is a plaintiff or defendant. And in this situation the Administration wants to be the plaintiff, not the defendant.

Such a process seems consistent with a large number of legal proceedings where the validity of laws is being challenged but not having a background in law I would defer to those here that do as to whether or not this is a viable strategy and a better one than a simple breach of the debt ceiling.

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